Internal & External Audit, Auditor-General

Internal & External Audit, Auditor-General

Quick Answer: Internal audit is the in-MDA first line of defence: every MDA must establish an internal audit unit that performs 100% pre-payment audit of all vouchers and reports to the Accounting Officer. External audit is vested in the Auditor-General for the Federation, a constitutional officer (§85) who is independent of any other authority, audits the public accounts of the Federation, and must submit reports to the National Assembly within 90 days of receiving the Accountant-General's financial statement. The Public Accounts Committees of the Senate and House then examine those reports and recommend sanctions.

Internal audit in the MDA (FR 1701-1717)

Internal auditing is defined (FR 1701) as an independent, objective assurance activity designed to add value and improve an organisation's systems and operations — a managerial control tool that measures and evaluates the effectiveness of internal controls. The Financial Regulations require:

• Establishment (FR 1701-1702): The Accounting Officer, in consultation with the Accountant-General, shall ensure an internal audit unit is established in every MDA. The Accountant-General shall ensure a professional accountant is placed as Director/Head of Internal Audit.
• Reporting line (FR 1703, 1707): The Head of Internal Audit reports directly to the Accounting Officer, with monthly, quarterly, and half-yearly progress reports copied to the Accountant-General and the Auditor-General. Reports cover the adequacy of safeguards against fraud, control of receipts and payments, stores, verification of funds and stamps, accuracy of accounting records, and observations on economy, efficiency, and effectiveness.
• Independence restrictions (FR 1710): Internal audit staff shall not be employed on accounting duties within the MDA, and no officer may engage in internal audit if previously engaged in accounting duties in that MDA in the past three years — a rotation rule that protects independence.

Pre-payment and post-payment audit

The most heavily tested internal-audit rule is FR 1706:

"The Director or Head of Internal Audit in all MDA and other arms of government shall ensure that 100% pre-payment audit of all vouchers is carried out and forwarded under security schedule direct to the appropriate Central Pay Office for payment."

Two operational rules follow:

1. Vouchers must be treated promptly — under no circumstance shall a voucher be held in Internal Audit for more than two (2) working days.
2. Internal Audit certification is done through Internal Audit stamps issued by the Accountant-General; stamps are security instruments, not transferable between officers, and loss of a stamp attracts surcharge and disciplinary action (FR 1711-1715).

Post-payment audit complements pre-payment audit. Internal audit reviews payments after the fact to confirm that they were correctly recorded, made to duly authorised persons, compliant with the MDA's payment rules, and supported by documentation. The Auditor-General also conducts post-payment audit — for example, pre- and post-payment audit of pensions and gratuities of retired military and civilian personnel (FR 110(2)(g)). The distinction the exam tests is: pre-payment audit checks a voucher before the cheque is raised, while post-payment audit verifies transactions after payment, often by an external auditor.

The Auditor-General for the Federation (Constitution §85-§87)

The Auditor-General is a constitutional office created by section 85(1) of the 1999 Constitution (as amended). The key provisions are:

The audit of Federation accounts and submission to the National Assembly

The audit cycle is:

1. The Accountant-General collates and consolidates the Federation's financial statements.
2. The Auditor-General audits those statements and the accounts of all offices and courts of the Federation (§85(2)).
3. The AuGF submits the audit report to each House of the National Assembly within 90 days of receiving the Accountant-General's financial statement (§85(5)).
4. Each House refers the report to its Public Accounts Committee for consideration.

The Auditor-General does not audit the accounts of statutory corporations and agencies directly; instead, under §85(3) the AuGF provides those bodies with a list of qualified external auditors, sets fee guidelines, and comments on their annual accounts — and under §85(4) may conduct periodic checks of them.

Public Accounts Committees and audit queries

The Senate Public Accounts Committee (SPAC) and the House of Representatives Committee on Public Accounts are the legislative receivers of the Auditor-General's reports. They:

• Examine the AuGF's audit queries and the Accountant-General's financial statements.
• Summon Accounting Officers to explain observations and query responses.
• Recommend sanctions — surcharge, recovery, disciplinary action, or referral to the EFCC/ICPC — against erring officers and MDAs.
• Transmit recommendations to the Executive and the National Assembly.

An audit query (or audit alarm) is a formal observation raised by the Auditor-General (or by internal audit) when an irregularity, unvouched expenditure, or unretired advance is detected. The queried MDA must respond within the period fixed by the Regulations (commonly 7 to 21 days, depending on the subject). A failure to respond satisfactorily triggers surcharge and recovery under the FR (e.g. FR 3112, 3124, 3106) and may be escalated to the PAC for legislative sanction. The Auditor-General has formally called on both PACs to conduct urgent, in-depth examinations of audit queries and impose clear sanctions on erring officers as a deterrent.